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June 17, 1988

The Government of the Republic of the Philippines and the Government of the Republic of Italy;

Within the framework of the Protocol of Understanding of September, 18, 1987:

Wishing to cooperate on the Pace e Riconciliazione project, hereinafter referred to as the "Project".

HAVE AGREED AS FOLLOWS

ARTICLE I

The Government of the Republic of the Philippines as represented by the National Economic and Develornment Authority, hereinafter referred to as "NEDA" designates the Regional Development Council X, hereinafter referred to as "ROC X" as the agency responsible for the implementation of its obligations under this Memorandum of Understanding. In carrying out said obligations, "RDC X" shall enter into M.O.U. with Xavier Science Foundation.

The Government of the Republic of Italy designates ELC Electroconsult S.p.a. (ELC) and the Italian Non Governmental Organization "Associazione Volontari Servizio Internazionale" CNGO AVSI), as the executing Agencies responsible for the implementation of its obligations under this Memorandum.

ARTICLE II

The primary objective of the Project is to substantially improve the living standards of about 1000 families in the area of Cagayan de Oro, composed of urban squatters, rebel returnees and qualified dependants of deceased military personnel (widows and orphans).

In particular the project seeks to improve their dwelling, nutritional and educational conditions and to integrate them back to the mainstream of national socio-economic development.

The second objective of the project is the improvement of the health conditions of the beneficiaries.

The main physical and organizational components of the project are the fol lowing:

- provision of housing facilities
  - provision and construction of basic infrastructures and community facilities such as health facilities, schools etc.
  - establishment of cooperative farms
  - provision of income
  - generating activities enterprises, including training and credit services
  - provision of basic support services
  - institutional development and organization.

ARTICLE III

The Government of the Republic of Italy, in accordance with prevailing laws and regulations, and with the resolution of the Directional Committee of the Italian Cooperation no. 69 dated February 1988, shall contribute with a grant of up to 8 billion Italian Lires (corresponding to 77% of the total foreseen cost). Details of the cost are contained in the plan of operation of the Project referred to in art. VIII of this Memorandum.

ARTICLE IV

The Government of the Republic of the Philippines, through the Dept. of Budget and Management in accordance with the prevailing Laws and regulations, shall allocate in local currency the equivalent of up to 2.39 billions of Italian Lires (corresponding to 23% of the total foreseen cost) to the Project. The amount shall correspond to the local implementation costs, details of which are contained in the plan of operation of the project, as referred to in art. VIII of this Memorandum. A separate M.O.U. among the DBM, NEDA/RDC X and XSF governing the flow of funds shall be concluded as soon as possible.

ARTICLE V

A coordinating Committee shall be established composed of ELC - NGO AVSI and XSF. The coordinating Committee shall prepare regular quarterly status and accomplishment reports, using NEDA prescribed forms, and submit these to the two Governments for review.

In case of disagreements between the members of the coordinating Committee the problems have to be submitted through the official channels to the Authorities concerned of the two Governments (Italian Embassy and NEDA).

ARTICLE VI

The Government of the Republic of the Philippines shall assure that the Italian firms and experts working in the Phi Lippines under this Project are granted all the privileges and exemptions contained in the agreement on Development Cooperation signed today by the two Governments.

ARTICLE VII

The two Governments and their designated executing Agencies shall ensure that this Memorandum of Understanding is carried out with due diligence and efficiency and each shall furnish the other with all information that may be considered necessary for the realization of the Project.

ARTICLE VIII

The plan of operation shall be completed and signed by designated officials as soon as possible it shall thereafter become an integral part and form annex C of this Memorandum.

ARTICLE IX

This Memorandum of Undestanding shall enter into force on the date of signature and shall remain valid until completion of the Project or on any date mutually agreed upon by the two Governments.

This Memorandum of Understanding which is stipulated in accordance with paragraph 8 Annex A of the Protocol of Understanding of September 18, 1987 between the Republic of the Philippines and the Republic of Italy is of technical nature and is intended only to set out the administrative responsibility of the two Governments.

This Memorandum of Understanding may be amended at any time with the mutual consent of both Governments through an Exchange of Letters.

Any dispute arising out of the interpretation or implementation of this Memorandum of Understanding shall be settled amicably by consultation or negotiation between the two Governments.

Any communication or documents given or sent by either the Philippine or Italian Government pursuant to this Project should be addressed to:
  For the Philippine Government

Mrs. SOLITA COLLAS-MONSOD
  Secretary of Socio-Economic Planning
  National Economic and Development Authority

P.O. Box 419, Greenhills
  San Juan, Metro Manila
  Philippines

Cable Address: NEDAPHIL

Telex Address: 29058 NEDPH
  4023 NEDA PU

For the Italian Government

Ambassador MARIO CREMA
  Italian Embassy
  6th Floor, Zeta Building
  191 Salcedo ST., Legaspi Village
  Makati, Metro Manila.

In WITNESS WHEREOF, the undersigned, have signed this Memorandum of Understanding.

Signed in Rome, on June 17, 1988 in duplicate in the English Language.